Budget  

Advisers urged to help landlords with new property licensing

Advisers urged to help landlords with new property licensing

Advisers have been urged to help landlords who may be receiving letters from lenders about their mortgages.

Following the recent changes to the house of multiple occupation licensing requirements, a further 177,000 properties may now require a HMO license.

As a result, David Whittaker, chief executive of Keystone Property Finance and Adrian Moloney, sales director for OneSavings Bank, highlighted how some landlords were already receiving letters from their buy-to-let lenders regarding properties which may now require a license. 

Speaking at the Financial Services Expo Midlands on November 2, the duo outlined that in these cases the original mortgage would not have been granted on an HMO property. Therefore, landlords in such a position have received letters which tell them to revert the property back to a single let or pay back the loan.

One delegate commented that several of her clients had received letters from "one of the two big ‘mainstream’ buy-to-let lenders" even though they had made no changes to the property, and it had been a government decision to change the licensing requirements. 

Both Mr Whittaker and Mr Moloney suggested this was increasingly happening and that advisers would potentially need to find new mortgages for their landlord borrowers in such a position. 

Mr Whittaker bemoaned those lenders who were sending such letters, saying: "Landlords are punch-drunk from the regulatory changes of the last few years.

"This is the law of unintended consequences in full effect and you would expect some common sense from lenders. Lenders should say that, as long as there are no changes to the property or that the landlord doesn’t want a further advance, that they can keep the loan."

Advisers were also warned that the recent changes meant that buy-to-let was no longer a transactional undertaking.

"Advisers have to move to a new place with buy-to-let from transactional to advisory," Mr Whittaker said. "Next year on the 23 January 2019 when landlords file their tax returns, it will be the first year of a four-year wake-up call.

"This is when they will need you; you have to help your landlords to the other side."

Neither panellist was surprised by the Budget, which did not introduce any landlord-supporting measures, such as rolling back extra stamp duty charges or a U-turn on the cuts to mortgage interest tax relief.

"Hammond is not called ‘Spreadsheet Phil’ for nothing," Mr Whittaker said. "He was never going to take them away. The best was that he would damn well leave it alone. Let’s be honest, he didn’t have much room to do anything in our world."

Prior to the Budget there was a suggestion that landlords might be able to get CGT relief if they sold their properties to long-standing tenants.

Mr Moloney expressed scepticism that any such policy would work in the first place. "If your investment is good why would you get rid of it?" he asked. "Sales of property investments have not been really picked up in the main by first-time buyers anyway, they’ve been picked up by other landlords."